June 26, 2000
RECEIPT OF SOCIAL SECURITY AND ELIGIBILITY FOR UNEMPLOYMENT COMPENSATION
By: Dennis Meltzer, Principal Analyst
Laura Jordan, Associate Attorney
You asked whether a person receiving Social Security retirement benefits can also be eligible to receive unemployment compensation benefits.
Individuals receiving Social Security benefits can receive unemployment compensation benefits if they otherwise qualify. However, federal law requires states to deduct from an unemployment compensation claimant's benefits the weekly amount of any “governmental [including Social Security] or other pension, retirement or retired pay, annuity or other similar periodic payment which is based on [his] previous work.”
The deduction applies to payments made under a retirement or pension plan contributed to by an employer who is being charged for the claimant's unemployment compensation benefits. An employer is charged if he employed the claimant at any time during the first four of the five most recently completed calendar quarters prior to the claim for benefits.
Federal law allows states to limit the deductions to take into account contributions the claimant made to the retirement plan or payments (26 USCA § 3304(15)). Connecticut law takes advantage of this provision and limits the deduction to the share of the employer's contribution (CGS § 31-227(g)). Because employers contribute 50% of each employee's Social Security taxes, the unemployment compensation deduction equals 50% of his Social Security benefit.
For example, suppose a person receives $400 per month in Social Security retirement benefits. At the same time, he has a job and receives a paycheck from which Social Security taxes are deducted. His employer must also contribute the same amount, so the employer and employee each pay 50% of the total Social Security contribution attributable to his employment.
Suppose the employee is then laid off and applies for unemployment compensation benefits. He is found eligible and, based on his wages, would ordinarily be entitled to $190 per week in unemployment compensation. But federal and state law require that a portion of the $190 unemployment compensation benefit be offset by his $400 Social Security benefit.
The offset is determined by dividing the monthly Social Security benefit into weeks to match the payment schedule of unemployment compensation benefits. In our example, the $400 monthly Social Security benefits would be counted as a $100 per week for a four-week month. The weekly amount is then divided in half to yield the amount of the offset because the employer's contribution to Social Security is 50%. Thus, in our example, the claimant's normal $190-per-week unemployment compensation benefit would be reduced by $50 to $140 per week.
The state Labor Department recommends that a person receiving Social Security bring his Social Security card and documentation of the amount being received when filing for benefits.